Are Sweepstakes Casinos Here to Stay? 
by Steve Bourie

META ⏵ Sweepstakes casinos like Pulsz and WOW Vegas continue to dominate the market, but doubts over their future remain.

Sweepstakes casinos have been gaining popularity ever since the COVID lockdown days. In just 5 years, they’ve gone from completely unknown to one of the biggest types of gaming sites on the internet. Chumba Casino even boasts of having “over 1 million” registered users, making casinos on the Las Vegas Strip look pretty small in comparison.

Simply put, we’re in the middle of a sweepstakes casino boom. Unsurprisingly, celebrities and influencers have also gotten involved with the movement, from rapper Drake signing a $100 million-a-year deal with Stake to Paris Hilton teaming up with the highly popular WOW Vegas casino. Some sweepstakes casinos are signing sponsorship deals with sports promotions like the UFC, as well, leading to astronomical levels of growth.

The sweepstakes party isn’t all plain sailing, though: a rising number of American states are actively looking to ban them. This comes following concerns over player safety and the legal “grey area” that sweepstakes casinos have been operating in since they first exploded. It’s caused a lot of confusion, so we’re going to take a closer look at what’s going on.

New Jersey has joined the pushback against sweepstakes casinos. At the end of June, NJ successfully passed a bill to ban sweeps casinos, with the bill being approved by a 34-5 Senate vote. What this means is that sweepstakes casinos like Chumba Casino will no longer be allowed to operate in NJ once Gov. Phil Murphy signs on the dotted line, which will no doubt lead to a noticeable drop-off in players for some of the leading sites.

It’s not just NJ that’s launched an attack on sweepstakes casinos. Many other states have done exactly the same, with the likes of New York, Connecticut, and Louisiana having also passed their own separate bills. Montana has even managed to pass its bill into law faster than expected, becoming the first US states to explicitly ban online sweepstakes casinos, while the remaining 8 states are still awaiting final approval. If these bills are successful over the next year, we could be looking at a situation where sweepstakes casinos are suddenly only available in around 40 states, whereas before they were accessible in almost all of them.

Things could potentially get worse for sweepstakes operators, too. Since the American Gaming Association (AGA) called for states in the US to start taking action against sweepstakes casinos last year, many of them have done exactly this, and there’s no telling how many might follow. There’s a good chance that even more states will start looking closely at sweepstakes casinos and decide to pass bills against them, something that would be nothing short of a nightmare for the operators behind this new type of online casino.

Why Are So Many Sweepstakes Casinos Being Banned?

It all comes down to the legal loophole that sweepstakes casinos use. If you didn’t know already, these sites don’t allow you to bet real money like regular online casinos do. Instead, players use virtual Gold Coins and Sweeps Coins. This is perfectly fine, except for the fact that “Sweeps Coins” can be redeemed for actual real-life prizes, such as cash transfers and gift cards. In a way, it’s still like gambling, which is why states have started to ban them.

This is something that New York’s Attorney General James spoke about recently following NY joining the fight against sweepstakes casinos:

“These so-called sweepstakes casinos not only put individuals at risk of fraud and financial exploitation, but they also create dangerous pathways for gambling addiction, especially among minors.”

Clearly, in the eyes of a growing number of state lawmakers, sweepstakes casinos are legitimate gambling sites, despite claiming not to be. And unless operators change their Sweeps Coins business model, it’ll be tricky for them to escape the law. After all, gambling is gambling, even if you substitute real money for virtual coins.

Should Players Be Worried?

The sweepstakes casino player base in America is huge (we’re talking millions of users here). It’s a huge community, so some players are naturally worried about the recent in states looking to ban the sweeps casinos they’ve signed up with. But for now, at least, there’s no need to panic.

America has a history of banning things that are gambling-related. You might have been around back in 2011 when “Black Friday” saw the the U.S. Department of Justice effectively shutdown all the major online poker sites, including PokerStars and Full Tilt Poker. But since then, online poker has made a comeback in the States, albeit on a much smaller scale. The point is that there was a time when people thought online poker was finished, only for it to survive and eventually return.

With sweepstakes casinos, they are probably going to get banned in even more states. That’s a given. However, players shouldn’t be too worried about it, as these casinos are still going to remain available in other states. Sure, Montana has just banned them, but the existing Montana-based players are likely just going to start using VPNs instead, so it’s not like the ban is completely stopping them from playing inside sweepstakes casinos ever again.

If the US was to ever introduce a federal country-wide ban on sweepstakes casinos, then it would be bad news for players. That’s never going to happen, though, so players shouldn’t be thinking the worst. It’ll simply be a case of adapting to whatever happens, much like the online poker situation from 2011.

The Sweepstakes Casino Market Projected to Keep Growing, Despite Recent Bans

One thing for sure is that the sweepstakes casinos industry is simply too big for it to be completely taken down. Ironically, despite the insane pushback against sweepstakes casinos, it just keeps on growing. The latest projection is that the sweepstakes casino market will reach a value of $13.57 billion by the time 2029 rolls around, reflecting a compound annual growth rate of 9.8%. Those are crazy numbers, so (in a way) it’s understandable why states have started to take notice of sweepstakes casinos. Before, they were somewhat flying under the radar, but with so much revenue being pulled in by sites like Chumba Casino and Pulsz, it was inevitable that some states would start to crack down on them.

BetMGM, Golden Nuggets and Others Will Face Stiff Competition from Sweepstakes Sites

The past 5 years have seen sweepstakes casinos grow at such a fast pace that they’ve even started to steal market share and customers from traditional online casino sites like BetMGM, Golden Nuggets, and even the popular FanDuel Casino. Ultimately, this is why the American Gaming Association lobbied on behalf of these classic sites against sweepstakes casinos, as there was an overriding panic going on that sweeps casinos were simply taking too many of their players. And despite some states passing bills to have sweepstakes casinos banned, they’re still going to cause a headache for traditional casinos moving forward.

At the moment, sweepstakes casinos have a foothold on the market. They’re hugely popular on streaming platforms, more influencers than ever are endorsing them, and these sites are generally seen as “safer gambling alternatives”, especially for Gen Z and Millennial players who don’t want to bet real money (every sweepstakes casino offers you the option to play for free using Gold Coins). Not to mention, they also offer exactly the same casino games, from slots to roulette, making them just like regular online casinos but with modern features thrown on top.

What we’re going to see unfold over the coming years will be interesting, as the ongoing war between classic online casinos and sweepstakes casinos is likely going to get more intense. It’ll be a fight for who can get the most market share, and you can bet all the classic casinos will be hoping (and praying) that more states start banning their sweepstakes counterparts so that they can gain some type of advantage.

Conclusion: Sweepstakes Casinos Are Here to Stay, But Potentially In a Smaller Capacity

With everything going on surrounding sweepstakes casinos, it’d be easy to assume they’re going to be banned all across the US. This is never going to happen. Sweepstakes casinos are absolutely here to stay, but it will likely just be on a smaller scale than before. If all of the ongoing bills against them make it into law, then we might have a situation where sweepstakes casinos are banned in 9 or 10 different states. That would still mean sweeps casinos are legal in the vast majority of them, allowing them to keep dominating the market while attracting new players at the same time. Sure, the sweepstakes casino “boom” of the early 2020s likely won’t ever be replicated. Make no doubt about it, though, this popular new type of casino isn’t going anywhere.

• SCCG Management. The Gambling Industry’s Global Connector. Access Here.
• Source: https://www.americancasinoguidebook.com/blog/are-sweepstakes-casinos-here-to-stay.html